The defense sector is currently being massively expanded and with it the demand for real estate. The Bundeswehr and suppliers need office, commercial and logistics space, some of which has very special requirements. DIP partner Aengevelt Immobilien has already brokered numerous defence properties and sees a rapidly growing market.
In view of increasing geopolitical tensions, the German government and the Bundestag have decided to significantly improve Germany’s independence and defence readiness. As is well known, the establishment of a billion-dollar infrastructure and special fund was decided and the debt limit was relaxed. Following the amendments to the Basic Law that have already been made, the volume of defence spending will gradually increase from €71.0 billion in 2024 to €152.8 billion in 2029. Expenditure on military procurement will increase disproportionately, from €20.4 billion in 2024 to €47.9 billion as early as 2026. The number of troops in the Bundeswehr is to be increased by 44% from around 181,000 active soldiers to 260,000 by 2029.
Growing demand for real estate and space on the part of the Bundeswehr and suppliers.
These decisions will mean that the Bundeswehr itself needs more land and real estate, for example for barracks, bases, training grounds or cyber defense centers. By July 1, 2027, 24 new mustering centers will be opened throughout Germany alone. According to the Bundeswehr’s Infrastructure Report 2024, around 8,000 state-led infrastructure construction measures with a project volume of approx. €1.6 billion were already underway in 2024; €1.7 billion is set for 2025, and the plans envisage an annual increase in project and construction volume of 10 to 20%.
As part of the pilot project “Bundeswehr Construction Programme for Accommodation” (together with the BImA), 76 buildings with more than 7,150 accommodations in 31 properties are planned by 2031, as well as an additional 270 company buildings with around 40,000 accommodation places for military service.
The momentum is also reflected in concrete major deals: According to Logivest, new construction projects for the defence and supplier industry were still below 10,000 m² in 2023; In 2024, the volume of new construction increased tenfold, including a warehouse of around 60,000 m² in Walsrode for the clothing management of the Bundeswehr as the largest single project. In the first quarter of 2026, a lease of around 65,300 m² followed in Wettringen (Münsterland) in the same user segment.
The additional demand for commercial, logistics and office properties is even greater among suppliers who produce vehicles, equipment, weapon systems, equipment and ammunition. The logistics specialist GARBE Industrial expects this alone to create an additional demand for industrial and logistics space of 10 to 20 million m². Based on the NATO goal of allocating 3.5% of GDP to core military competencies, the market forecasts an additional space requirement of around 6 million m² by 2033 in Germany alone and 37 million m² across Europe.
Great diversity of types and locations.
Defence properties will be very diverse in both type and locations. For example, mustering centres need metropolitan, easily accessible locations. The headquarters of the arms companies are also mainly located in classic office properties in metropolitan locations. Manufacturing plants and logistics centers are either built in remote locations and/or in locations that have direct connections to the necessary transport infrastructure – such as railway lines, highways, ports or airports.
High property requirements.
Sites and buildings also require an increased security architecture with controlled access gates as well as data and energy redundancies. The products to be manufactured, stored and transported can have extreme loads (e.g. armoured vehicles), be sensitive (e.g. aircraft, electronics) or be associated with a risk of explosion (e.g. ammunition). The objects must also be secured against acts of sabotage and drone attacks, which already pose real dangers in the context of hybrid warfare. The demands on heavy-duty connections, hall height, foundations and floor loads, redundant supply systems, high-security warehouses, etc. are therefore much higher than for conventional commercial and logistics buildings.
Rising prices for suitable plots.
Prices for suitable locations are rising accordingly: Aengevelt is observing premiums of up to 30% in the market.
“On the other hand, there are attractive opportunities for investors from long-term, stable leases with players from the fast-growing defence sector due to the global political situation and the associated special fund as well as the opportunity for portfolio diversification,” explains André Rebmann, real estate expert at Aengevelt Magdeburg, and adds: “Our company is currently working intensively on concrete search orders and the associated complex, divergent requirement profiles.”
Challenges include security and secrecy requirements, complex approval processes due to completely different (NATO) criteria, lack of or limited third-party usability, and lack of compatibility with ESG criteria.
Under the keyword dual-use, a separate market segment is emerging on two levels: The Federal Ministry of Defence (BMVg) is relying on co-use by the Bundeswehr and third parties for existing properties and in October 2025 stopped the civilian conversion of around 200 locations for the time being in order to be able to respond to demand at short notice. At the logistics level, new halls are increasingly being planned in such a way that they can be repurposed militarily in the event of a crisis. For investors, this means additional planning security.
In addition to new construction, Defence Properties is also considering the conversion of suitable brownfields, especially sites that are being opened and released by other industries (such as the steel industry, the automotive industry, rail vehicle construction or civil shipbuilding).
Result.
Chiara Aengevelt, Managing Partner of Aengevelt Immobilien: “Defence Properties are developing into one of the most dynamic growth segments in the German real estate market. The massive expansion of the Bundeswehr and the armaments industry creates a space requirement that is significant in terms of dimension and speed. For investors, long-term, stable leases with the public sector or strong industrial partners offer attractive prospects. For owners of suitable properties, in turn, the segment opens up attractive sales options, especially in the case of business properties that are no longer necessary for operation.”
